My Merchant Account Blog

How to Handle a Large Order

Friday, November 16, 2007

When you have an order that varies significantly from your typical order size, special care needs to be taken to make sure the order is legitimate. Fraudsters typically place large orders with unsuspecting merchants so you should be wary of shipping out merchandise until you have fully "vetted" the order.  For example, lets say your average ticket is about $200.00.  You just received an e-mail from your store showing that a customer has placed an order for $3,000.00 worth of merchandise and the electronic payment gateway shows that the address verification (AVS) and Card Verification Value 2 (CVV2) was verified. But what now?  Do you ship out the merchandise to the customer and hope that they are legitimate?  Of course not!  The AVS and CVV2 verifications are simply not adequate enough to ensure that the customer is not using a stolen credit card.  Further vetting of the transaction is required.

Vetting the Transaction

Fraudsters will ask that the merchandise be shipped to a different address than the one on the credit card so a good place to start is to look at the Internet Protocol (IP) address of the consumer to see if it is close to the credit card billing address. Some merchants have a service built into their shopping cart software that will verify this automatically. Or you can use a website like Geo IP Tool or IP 2 Location.  Unfortunately, this might not work for all consumers, especially dial-up users on America Online (AOL). For example, an IP address of AOL is 172.192.48.225. Most of these will report back to Reston, Virginia, United States. This does not help you as the merchant, especially if the billing and shipping address is in Colorado.

Contacting the Consumer

Fraudsters will typically not leave a valid phone number and will usually use a free email service such as Yahoo!® or Hotmail®. Don't hesitate to contact the customer on large orders. When calling them you should identify yourself and ask them to verify the order. Don't be afraid to also e-mail the customer and ask them to reply back to the e-mail to verify the order. You might also require the customer to sign a credit card authorization form and fax it to you.

Require a Signature on Delivery

When shipping out the order, ask the shipper to get a signature on delivery. You should also notify the customer that you will require a signature on delivery or else the merchandise will be returned.

Contact your Payment Processor

After you have vetted the transaction and documented your actions, contact your merchant account provider before your daily batch is uploaded. Most processors will place funds on hold if the order amount is significantly larger than the typical ticket size for your account. Tell them about the order and what you have done to verify it. Ask them if they need you to do anything else. When they tell you everything is OK, get the representative's name and / or employee ID number.